INDEPTH: WORLDCOM
The WorldCom story
CBC News Online | September 26, 2006
The following is a timeline showing the rise and fall of WorldCom Inc.:
Bernie Ebbers
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1983:
Bernie Ebbers, a former basketball coach from Edmonton, buys a long-distance resale service that he names Long-Distance Discount Services (LDDS)
1985:
Ebbers becomes chief executive officer of LLDS.
Early 1990s:
Ebbers creates WorldCom, combining LLDS with two smaller companies - MFS Communications and UUNet.
1994:
LLDS becomes one of the top four long-distance companies in the U.S.
1995:
WorldCom is fined $50,000 US and ordered to repay $70,000 US in investigative costs for its role in gathering employee campaign contributions for a candidate running for the Mississippi Public Service Commission in 1991.
1995-2000:
WorldCom buys more than 60 companies, often using its own soaring share price to help fund the acquisitions.
1997:
WorldCom takes over MCI Communications for $37 billion US - at the time the largest takeover in American corporate history.
1999:
Forbes magazine cites Bernie Ebbers's fortune at $1.4 billion US.
2000:
U.S. communications regulators veto WorldCom's $129-billion US offer for Sprint Corp., which WorldCom had hoped would add wireless and local phone assets to the mix.
Fall 2000:
WorldCom warns its earnings will fall short of estimates by 40 per cent, and that 2001 earnings would be even lower. Ebbers falls into enormous personal debt as he'd pledged his WorldCom shares as collateral for loans. WorldCom's board loans him $375 million US to pay off his debts, without making him sell all his shares in the company. Ebbers decides to split WorldCom into two components as MCI starts to fall.
2001:
Ebbers fails to make the Forbes 400 richest Americans list.
January 2002:
WorldCom gets hit with fallout from the bankruptcy filing of Global Crossing, a telecom company, and from the fact that Ebbers might have to sell millions of his WorldCom shares to repay personal loans.
April 29, 2002:
Shares hit all-time low of $2.35, down more than 95 per cent from their peak of $64.50 on June 21, 1999. Ebbers resigns as CEO after the stock free-fall. He is replaced by John Sidgmore.
June 25, 2002:
WorldCom discloses that it inflated profits for more than a year by improperly accounting for more than $3.9 billion US. This means that it transferred routine expenses to capital expenditures, making its earnings appear larger than they actually were. WorldCom announces that it will lay off 17,000 workers within the week. The board fires CFO Scott Sullivan, and controller David Myers resigns. WorldCom shares drop to 20 cents.
June 26, 2002:
News of the WorldCom scandal sends shock waves through stock markets, sending benchmark indices to new post-Sept. 11 lows. WorldCom share trading halted. President George W. Bush says the U.S. Justice Department is investigating.
July 2002:
WorldCom files for bankruptcy protection, listing $41 billion US in debt.
Aug. 8, 2002:
Auditors find another $3.3 billion US accounting irregularity. The revelations will force the company to restate its earnings for 2000. The company already has to restate its financial results for all of 2001 and the first quarter of 2002.
March 2004:
Ebbers pleads not guilty to charges of fraud and conspiracy in connection with an $11-billion US fraud at WorldCom.
May 2004:
Ebbers charged with falsifying regulatory filings with the U.S. Securities and Exchange Commission in 2001 and 2002.
March 15, 2005:
Ebbers found guilty by a federal jury of fraud, conspiracy and filing false documents with regulators. He faces up to 85 years in prison.
July 13, 2005:
A New York judge sentences Ebbers to 25 years in prison. She says Ebbers has until Oct. 12 to report to prison and she would recommend a low-security federal prison in Yazoo City, Miss., near his home. Ebbers' lawyer said he would appeal the verdict.
Dec. 24, 2005:
The Economist mentions Ebbers’s WorldCom woes in an article subtitled “America’s most-hated companies.”
Jan. 30, 2006:
Judges hearing Ebbers’s appeal question whether prosecutors threatened ex-WorldCom executives with criminal charges to keep them from testifying as potential defence witnesses. Ebbers argues that 25 years is too harsh a sentence for a white-collar crime.
July 28, 2006:
A three-judge panel for a U.S. Appeal Court upholds Ebbers’s 25-year prison sentence, clearing the way for Ebbers to begin serving time. In a note to the court, Judge Ralph Winter acknowledges the 25-year sentence is “longer than the sentences routinely imposed by many states for violent crimes, including murder,” but not unreasonable given the losses to investors.
Sept. 7, 2006:
In a public ruling, a federal judge orders Ebbers to report to prison on Sept. 26.
Sept. 26, 2006:
Ebbers enters a federal prison in Louisiana to begin serving his 25-year sentence.
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